Forida's courts are requesting a one-time payment of $9.6 million to help purge the system of backlog foreclosures and quicken a market recovery. The Florida State Courts Administration estimates 500,000 property foreclosures are pending, including 55,000 in Palm Beach County.
Without additional resources to clear the cases, judges fear the bottleneck will continue to drag down home values, which aren't expected to stabilize until the glut of foreclosures moves through the system. It's routine in Florida for foreclosures to take more than a year to settle, leaving deteriorating homes, unpaid association fees and families facing uncertain futures.
Peter Blanc, chief judge of the 15th Judicial Circuit Court in Palm Beach County, states:
"We want to be good partners in the economic recovery, not part of the problem. We want to get properties through the courts and back onto the market. The numbers are just overwhelming."
A Barclays Capital report last week stated that Florida has one of the highest foreclosure backlogs nationally, even singling out South Florida — Miami-Dade, Broward and Palm Beach counties — saying it is "remarkable" that the area may only be 18% finished with liquidating its delinquent property loans through foreclosure.
Florida's lawmakers are considering the court's appeal for more money, which would come from the State Courts Revenue Trust Fund, and pay for additional case managers and retired senior judges.
Court Administrator Lisa Goodner said the Senate's proposed 2010-2011 budget includes the full request, while the House's proposal has $1 million set aside. The money would be doled out to district circuit courts based on their foreclosure caseloads.
Goodner states:
"They'll be more cases coming in while we're working on this, and there just doesn't seem to be any relief in sight."
Some housing analysts predict another wave of foreclosures this year as unemployment persists and interest-only and adjustable rate mortgages awarded in 2005 reset.
And the courts aren't the only ones looking for ways to speed the foreclosure process.
Two bills (HB 1523, SB 2270) would allow lenders to foreclose on properties without going through the courts.
According to RealtyTrac, 30 states allow nonjudicial foreclosures.
The bills, sponsored in the House by Tom Grady, R-Naples, and in the Senate by Mike Bennett, R-Bradenton, are not identical, but are generally aimed at allowing lenders to skip legal proceedings unless the borrower requests that the foreclosure goes through the courts.
The lender must also meet with a borrower, if requested, and the borrower will not be liable for the unpaid portion of the loan if he or she acts in good faith during the nonjudicial foreclosure. Under the proposal, a foreclosure could occur in as little as 90-days.
Anthony DiMarco, executive vice president of government affairs for the Florida Bankers Association which spearheaded the legislation, states:
"The condo associations aren't being paid, the homes are falling apart, and people are looking at us for a solution."
In the House staff analysis, writers of the bill note many foreclosures are uncontested by the borrower, but can still get caught up in the legal logjam. However, homeowner advocates say the proposals strip the borrower of due process.
Coral Gables real estate attorney Rashmi Airan-Pace states:
"The average homeowner has no clue what to do in this process, now, all of a sudden, they aren't even getting the process." Furthermore, Victor Tobin, chief judge of the 17th judicial circuit court in Broward County, said the legislation may have state constitutional conflicts.
Chief Judge Blanc said he doesn't want to give up due process for the sake of "expediency."
Both support the $9.6 million budget request.
Tobin statement about Florida's foreclosure crisis.
"It's cataclysmic, to be honest with you. It's a catastrophe for everyone."
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